State Budget Debate Highlights Key Regulation Reforms

JLF expert touts benefits of two proposals included in Senate plan

RALEIGH — Negotiations over North Carolina's next state budget have raised awareness about two key reforms of the state's regulatory process. The John Locke Foundation's top regulation expert touts those two "necessary changes" in a new Spotlight report.

"State agencies should not be allowed to issue regulations that exceed federal requirements, and cost-benefit analysis should be required for all agencies," saidDaren Bakst, JLF Director of Legal and Regulatory Studies. "Those two regulatory reforms should have a positive impact on the economy, but they are first and foremost about promoting good government."

The N.C. Senate addressed both issues in its budget plan. One Senate budget provision would prohibit the state departments of Agriculture and Consumer Services, Environment and Natural Resources, and Labor from issuing regulations that exceed federal standards. A second provision would require a cost-benefit analysis for many regulations.

"Regardless of whether a budget is the proper place to make these policy changes, both changes are long overdue," Bakst said. "The state legislature is trying to take back some of the power that it originally delegated and also put in some common-sense protections to limit the excessive costs of agency regulations."

The first provision is often labeled a no-more-stringent law, Bakst said.

"The question is whether unelected, unaccountable bureaucrats or political appointees should decide whether the state should exceed federal standards, or whether elected lawmakers should make these decisions," he said. "As a matter of good government, on issues of such magnitude that can kill jobs and make the state less competitive with its neighbors, the state's lawmaking body -- the legislature -- should be responsible. Legislators should decide whether North Carolina should impose extra costs and burdens on its citizens."

About one-third of the states have no-more-stringent laws linked to regulations from the U.S. Environmental Protection Agency, Bakst said. That number does not include additional laws limiting state regulation in areas other than the environment.

The second key provision, mandatory cost-benefit analysis, has been part of other governments' regulation standards for decades, Bakst said. "The federal government has required a form of cost-benefit analysis of regulations for nearly 40 years."

Gov. Beverly Perdue has recognized the need for cost-benefit analysis, Bakst said. "The governor's 2010 executive order on regulatory reform required cost-benefit analysis for agencies under her oversight," he said. "The legislature should codify in statutes detailed cost-benefit analysis for all state agencies."

Bakst's report explains why environmental extremist groups have attacked these common-sense reforms. "It is much easier for these groups to convince political appointees or bureaucrats to push their extreme agendas than it is to convince a majority of both chambers of the legislature," he said. "Unlike the bureaucrats, legislators must answer to the people who bear the costs of regulation."

Despite the environmental groups' complaints, a no-more-stringent law would not prevent North Carolina from exceeding federal regulatory standards, Bakst said. "The law simply moves the decision-making process back where it belongs."

Bakst rebuts another criticism. "It is ironic when critics of a no-more-stringent law contend that such a prohibition would create a one-size-fits-all system of regulation," he said. "This is precisely the argument against federal regulation in the first place. Critics concerned about a one-size-fits-all approach should lead the call for repeal of federal regulations. I'm not holding my breath waiting for that to happen."

The Senate's proposals mark a step in the right direction, Bakst said. "Unelected state bureaucrats and political appointees make some of the biggest policy decisions in North Carolina," he said. "These decisions can have a devastating effect on the economy and on jobs. If the public is unhappy about these decisions, there is nothing voters can do. They are unable to vote these individuals out of office."

"It may be beneficial for certain special-interest groups to influence agencies and commissions behind the scenes," Bakst added. "For the citizens of North Carolina and for good government, policies that can have a major impact on the state should be discussed and debated in the open by elected lawmakers."